this is also available on the EMS website..."de-risk" is a key...

this is also available on the EMS website...
"de-risk" is a key term.


Analyst: Allan Franklin
Contact Number:
+61 8 9263 1151

Eastland Medical Systems Ltd (EMS) $0.077


Event

Eastland has provided details of the Rwandan Clinical Trial results. The three primary efficacy parameters were met with the key points below:
- ArtiMist was rapidly absorbed following first administration via the sublingual route;
- The new route of administration was shown to be safe and well tolerated by patients; and
- Reduction of parasite count was seen within 24 hours of first dose.
There were no safety related withdrawals and no adverse events related to ArtiMist.
Importantly, there were no clinical or statistically relevant differences between ArtiMist and IV quinine in any of the study efficacy parameters.
ArtiMist was rapidly absorbed reaching high plasma concentrations, which in turn correlates well with the rate of parasite reduction and clinical response by those patients that received ArtiMist.
Impact

The PhaseIIa clinical trial results confirms ArtiMist's efficacy when compared to IV quinine. As a resultArtiMist may well be adopted as a rapid first line treatment of children with severe malaria, or uncomplicated malaria with gastrointestinal complications.
When comparing ArtiMist to IV quinine or other available therapies and administration routes, a number of advantages are present:
- No medically trained personnel required for administration;
- Suitable for use in rural and remote regions (where ineffective tablets may be the only option);
- Avoids the gastrointestinal tract (first-pass effect);
- Shelf life > 2 years in sub-tropical climates;
- No risk of infection from needle use; and
- Reduces the cost burden to families and healthcare systems.
While an ampoule of quinine alone is inexpensive, the cost of treating a patient via IV quinine is high once transport, food and hospitalisaton costs are considered (hospitalisation is typically 7days). ArtiMist postures a highly effective, accessible and easy to administer alternative to the widely recommended IV quinine (recommended by the World Health Organisation across Africa as the front line drug for complicated malaria).
The commercial significance of the project has taken a step forward with Eastland noting internal estimates of a potential market size of 80 - 100 million units p.a. in Africa alone.
The next key stepforward as announced by Eastland today is a confirmatory multi centre study in September 2010. The study will provide additional information enabling 'an even stronger clinical file to any interested parties'. The cost is estimated at $1.3m which is expected to be met via proceeds from the anticipated disposal of West Coast Surgical and augmented by working capital.
The ideal end result would be a partnering agreement with an international pharmaceutical company. For example, pharmaceutical companies with malaria interests currently are Novartis ('Coartem' uncomplicated malaria drug treated 80 million people in 2009, implying over US$300m in sales), Sanofi Aventis ('ASAQ' uncomplicated malaria drug treated 25 million people in 2009) , GlaxoSmithKline ('Malarone' prophylaxis antimalarial had sales of US$56m in 2009) and Cephalon (acquired Mepha Ltd). There are also numerous Indian and Chinese listed and private companies.
To this end, Eastland have appointed AFG Ventures Group to advise on commercialisation options for ArtiMist. The principal advisor is Ms. Karen Dado who has more than 20 years background and experience in international pharmaceuticals. Ms. Dado will explore options such as sub-licensing, strategic partnerships and earn-in arrangements.
While today's announcement has been made amidst a weak market environment, we note that the positive results are a signifcant derisking factor for Eastland which the market may well start to appreciate over the coming days.
Disclosure: Patersons Securities Ltd acted as Lead Manager to the Share Placement that raised $0.87m at $0.03 per share for Eastland? in May 2009. It received a fee for this service.
Patersons Securities Ltd acted as Lead Manager and partial Underwriter to the Rights Issue that raised $3.28m at $0.03 per share for Eastland? in June 2009. It received a fee for these services.

Allan Franklin
Research Analyst

D: +61 8 9263 1151 | F: +61 8 9325 6452 | E: [email protected] | W: www.psl.com.au
Patersons Securities Limited AFSL No. 239 052
Level 23, Exchange Plaza, 2 The Esplanade PERTH WA 6000